CART, the group behind the St. Petersburg Grand Prix, loses millions more and is running through cash.
By ALICIA CALDWELL
Published May 7, 2003
The Grand Prix of St. Petersburg's financial power dwindled Tuesday as reports revealed that the race's organizer suffered steep losses in the first quarter of this year.
Championship Auto Racing Teams, attempting to build a worldwide racing circuit with a slate of relatively unknown drivers and Indy-style cars, reported a net loss of nearly $9-million for the quarter ended March 31. It is a significant increase over the $1.5-million loss in the same period last year.
More troubling, said analyst Dennis McAlpine, is the rate at which the struggling race sanctioning body, headed by chief executive Chris Pook, appears to be spending down its cash. Cash and short-term investments decreased nearly $16-million to $70.6-million between Dec. 31, 2002, and March 31 of this year.
"The problem is, if he goes through cash as fast as he has this quarter, he's going to go through all that money before people get a chance to know his drivers," said McAlpine, whose firm, McAlpine & Associates, is based in Scarsdale, N.Y. "At that pace, they could run out of money by the end of the year."
CART's filing with the Securities and Exchange Commission comes within days of reports that showed race promoter Dover Motorsports, based in Dover, Del., had suffered losses approaching $1.3-million on the Grand Prix of St. Petersburg, held in February on the city's waterfront.
The St. Petersburg race, which drew an estimated 50,000 fans over three days, was a new event this year for CART, which ran just one other race - in Monterrey, Mexico - in the first quarter.
Financial statements for CART, based in Indianapolis, showed nearly $11-million in "race distributions," a more than 10-fold increase. The largest portion of this quarter's race distributions - $8-million - went for team assistance payments, which the CART report said were "being made to ensure that there are a sufficient number of race cars competing" in the series.
CART's Pook was in Europe on Tuesday and could not be reached for comment. He was quoted in the report as saying this about CART's first-quarter performance:
"We continue to face challenges on many fronts, especially in the face of a weak economy and global events. However, we have strengthened our sales efforts and continue to make strides in promoting CART's advantages as a powerful marketing tool for multinational companies interested in exploiting the global marketplace."
Overall, the report showed expenses were $20.6-million for the first quarter, up from $7.6-million a year earlier. The net loss per share was 61 cents, compared with 11 cents for the same quarter last year.
The stock, traded under the ticker symbol MPH on the New York Stock Exchange, closed Tuesday at $3.27, down 28 cents a share. At its peak in 1999, it was $33.62 a share.